The October 12, 2023 joint statement had warned that creditor policies tied to immigration or citizenship status could, in some circumstances, violate ECOA's and Regulation B's prohibitions on discrimination based on protected classes, including race and national origin.
The agencies said they withdrew the statement "to avoid any conflict with the express language of ECOA and its implementing regulation, Regulation B."
"For decades, ECOA regulations have permitted lenders to consider a borrower's lawful residence status and other information necessary to protect their rights and remedies with respect to repayment," Acting CFPB Director Russell Vought said. "We are correcting the last administration's attempt to ignore these well-accepted and common-sense principles of our nation's fair lending laws."
Assistant Attorney General Harmeet K. Dhillon of the DOJ Civil Rights Division said the administration is restoring "alignment with established federal civil rights law rather than continuing the prior administration's ideologically-driven departures."
"The federal government is committed to avoiding statements that could confuse the law or imply compliance standards for civil rights laws that lack any statutory or regulatory basis," Dhillon said.
The agencies said ECOA and Regulation B permit creditors to consider "pertinent elements of credit-worthiness and information necessary to protect creditor rights and remedies," including a borrower's immigration or citizenship status. They added that lenders may consider such status to avoid financial risks and to comply with other laws.
The agencies also said withdrawal was appropriate to address "any misimpression" that the 2023 statement interpreted 42 U.S.C. § 1981 to confer liability "that has not already been recognized by courts," and to avoid unnecessary compliance burdens.